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Thursday, 16 January 2020

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

A peek into biohacking - trying to extend human lifespan to beyond 100 years
Silicon Valley pros see a century of human life as a 20th-century limitation. If we went from a TRS-80 to an iPhone in 30 years, we can surely double human life using big data and self-quantification. What is the body if not another piece of hardware waiting to be hacked? Isn’t it time that death got disrupted?

Renting clothes - the next big disruption!! ;-)
Rental is going strong, with Rent the Runway, the pioneer in this area, now 10 years old and profitable. The global online clothing rental market is expected to grow annually by over 10% for the next four years, according to MarketWatch. And the fashion resale market has been expanding a breathtaking 21 times faster than traditional retail over the past three years, Fortune reports. Millennials and Gen Zers, in particular, enjoy frequenting thrift and consignment stores, shredding the last remnants of social embarrassment about such places and remaking their image into trendy shopping destinations.
Rent the Runway, an online service that rents out designer clothes and accessories, was a major leap toward bringing the sharing economy into the fashion business. Today, the company’s subscription base has crossed 11 million members.

How Technology is Hijacking Your Mind — from a Magician and Google Design Ethicist
Magicians start by looking for blind spots, edges, vulnerabilities and limits of people’s perception, so they can influence what people do without them even realizing it. And this is exactly what product designers do to your mind. They play your psychological vulnerabilities (consciously and unconsciously) against you in the race to grab your attention.

Here is another reason for trying to be wealthy ;-)
According to a new study, wealthy men and women don’t only live longer, they also get eight to nine more healthy years after 50 than the poorest individuals in the United States and in England. Though education level and social class had some effect, neither was found to be nearly as significant as wealth. Additional study is required to understand why wealth in particular is such a strong indicator of how long someone lives unimpaired, but it was most likely a function of having access to funds when you have ill health. Additionally, poverty has been linked to higher stress levels, which has implications for health.

How to lose a monopoly? Learn from Microsoft and IBM
A big rich company, a company that dominates the market for its product, and a company that dominates the broader tech industry are three quite different things. Market cap isn’t power.
IBM ruled mainframes and Microsoft ruled PCs, and when those things were the centre of tech, that gave them dominance of the broader tech industry. When the focus of tech moved away from mainframes and then PCs, IBM and then Microsoft lost that dominance, but that didn’t mean they stopped being big companies. We just stopped being scared of them.
For both IBM and Microsoft, market power in one generation of tech didn’t give them market power in the next, and anti-trust intervention didn’t have much to do with it. It doesn’t matter how big your castle is if the trade routes move somewhere else.

Thursday, 9 January 2020

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

Retailers are fighting back online returns
Some in the industry that created the monster are trying to put it back in its cage. They’re taking baby steps—not providing pre-paid mailing labels, requiring a receipt unless an unwanted item is carried to a store—but also threatening to cut off serial returners, the most troublesome of the offenders. Among the others: people who wait months (or more) before returning and the so-called wardrobers, who wear articles of clothing and then ship them back.
Reverse logistics — the transport from buyers to sellers — is not only costly on its own but creates a need for lots of room for storage. Return stock is thrown into an empty space in a warehouse to pile up until someone can get to it.

And fintech startups are getting into the space to facilitate returns
Consulting firm Newmine launched its Chief Returns Officer product. Newmine says that it processes data from multiple sources and uses “data science and AI principles” to determine the cause of returns in near real time. Retailers using the service receive actionable recommendations for resolving problems during the selling season.
Supply.ai’s ReturnSense is a returns prevention platform that learns customer behavior, detects the likelihood of returns, alerts the retailer and intervenes in the purchase process to mediate with customers about their product choices. The firm says its algorithm draws from over 1,000 data variables to predict which orders are likely to be returned. The company says that its service prevents returns and makes shoppers feel more confident in their purchase choices.
Other technology providers include Returnly, a fintech platform that turns product returns into repurchases by enabling customers to buy again with instant exchanges and refunds, before they have even returned their items. Appriss Retail’s Verify service is a consumer-based returns authorization system that uses predictive algorithms and statistical models to distinguish those engaged in fraudulent and abusive behavior and deny them the ability to make returns.

A real-life thriller in the making - the escape of Carlos Ghosn
One of the country’s most famous criminal suspects had slipped past the cameras trained on his house, past the police and border guards and the Japanese citizens who for the past year have followed his every move.
Carlos Ghosn, the deposed chief of the Nissan and Renault auto empire facing charges of financial wrongdoing, had fled to Lebanon, and no one in Japan — not the authorities, the media or even the auto executive’s own lawyer — could explain how it had happened.
It was a cinematic escape, carried out just before New Year’s Day, Japan’s most important holiday, when government agencies and most businesses close for as long as a week.

The search for a distraction free environment goes back centuries!
Medieval monks had a terrible time concentrating. And concentration was their lifelong work! Their tech was obviously different from ours. But their anxiety about distraction was not. They complained about being overloaded with information, and about how, even once you finally settled on something to read, it was easy to get bored and turn to something else. They were frustrated by their desire to stare out of the window, or to constantly check on the time (in their case, with the Sun as their clock), or to think about food or sex when they were supposed to be thinking about God.

Understanding the US-Iran conflict through the lens of history
From the CIA-orchestrated overthrow of Iran's prime minister in 1953, to tension and confrontation under President Trump, a look back over more than 65 years of tricky relations between Iran and the US.

Monday, 30 December 2019

Presentation in MDI Gurgaon

Earlier this month I had the absolute privilege of addressing Prof Bakshi's class at MDI Gurgaon. Attached is the presentation I shared in the session. I made this presentation specifically keeping in mind students who may not be seasoned investors and for whom, the meta-skills are more important to learn.

Thursday, 26 December 2019

Weekend Reading

Wishing you all a Merry Christmas and a wonderful New Year Ahead.

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

The economics of the "young old"
The year 2020 will mark the beginning of the decade of the yold, or the “young old”, as the Japanese call people aged between 65 and 75.
Health worsens with age, but the yold are resisting the decline better than most: of the 3.7 years of increased life expectancy in rich countries between 2000 and 2015, says the World Health Organisation, 3.2 years were enjoyed in good health. The yold are also better off: between 1989 and 2013, the median wealth of families headed by someone over 62 in America rose by 40% to $210,000, while the wealth of all other age groups declined.
The yold are busier, too. In 2016 just over a fifth of people aged 65-69 were in work in rich countries, a figure that is rising fast. Working is one of the factors that are helping people stay healthy longer. A German study found that people who remain at work after the normal retirement age manage to slow the cognitive decline associated with old age and have a cognitive capacity of someone a year and a half younger.

8 ways financial statements are manipulated
Every company manipulates its numbers to a certain extent to make sure budgets balance, executives score bonuses, and investors continue to offer up funding. Such creative accounting is nothing new. However, factors such as greed, desperation, immorality, and bad judgment can cause some executives to cross the line into outright corporate fraud. Investors should know how to recognize the basic warning signs of falsified statements. While the details are typically hidden, even from accountants, there are red flags in financial statements that can point to the use of manipulating methods.

Reducing noise helps in forecasting better
In a digital world swarming with fake news and sensationalist content, those who cast about widely for information are sure to reel in some strange fish. To extrapolate, superforecasters’ true edge may be more about discipline – the mental rigour required to distinguish random from revealing data – than innate wisdom or intellectual objectivity.
Whatever the reason, investing in noise reduction may not be a bad idea. One proven, if drastic, noise-reduction solution is to assign predictions to algorithms rather than humans. Bots are programmed to pay attention to patterns in data and discount random information.

The silent mobile revolution in India
There are now more than 450 million mobile internet users in India, a number that is expected to grow to 667 million by 2022. Not so surprising considering that India has the lowest data costs in the world and its fixed-line download speeds continue to rise. It’s not just the urban middle class who have benefitted. Nearly half of India’s 250,000 village councils are now connected by fibre optic networks, with the other half scheduled to come online in the next two years. More than 300,000 so-called common service centres have been set up around the country to provide even impoverished villagers with access to digital services.

Always average up
Never double down, always double up. And here’s the interesting thing, so most people think if you’ve done the work and you buy something and it goes against you, you should buy more. And what Julian would say is no, we’re just wrong. Made a mistake and the market’s right, the market’s … this goes back to the efficient markets. It’s not that the market’s always efficient, but when it’s telling you you’re wrong you should listen to it. And there’s the famous picture of Paul Tudor Jones in his dorm room with the losers average losers sign.
Now most people would say, “Well wait a minute, that’s not a value investor.” Well think about it, is it or is it not? So what he’s saying is when he had edge, when he had knowledge about an area, an asset, a company and they made an investment and now the market is coming around to your view, rather than do what most human beings do, which is pull their flowers. They’re so happy to have a win they take profits. He’s like, “Well let’s buy more because it’s working.” And there’s the simple statement of let’s do more of what’s working and less of what’s not. Most of us don’t do that, we do more of what’s not working and less of what’s working, which is why the average person underperforms.

Friday, 20 December 2019

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

The last decade in pictures
A peek into the happenings of the last decade through the lens. Some stunning pictures remind us of the good, bad and ugly events that shaped the world.

Zanshin - Focus on the process more than the results
We live in a world obsessed with results. Like Herrigel, we have a tendency to put so much emphasis on whether or not the arrow hits the target. If, however, we put that intensity and focus and sincerity into the process—where we place our feet, how we hold the bow, how we breathe during the release of the arrow—then hitting the bullseye is simply a side effect.
The point is not to worry about hitting the target. The point is to fall in love with the boredom of doing the work and embrace each piece of the process. The point is to take that moment of zanshin, that moment of complete awareness and focus, and carry it with you everywhere in life.
It is not the target that matters. It is not the finish line that matters. It is the way we approach the goal that matters. Everything is aiming. Zanshin.

The wisdom of Nemish Shah
Investing, according to him, is simple and complicated at the same time, in a sense a lot like art. He says while investing in India follows the same rules as elsewhere, there is one crucial difference—here, the quality of the management has to be considered closely. “Abroad one can go by what is there in the books, but here you have to add one additional layer—the management,” says Shah. But as long as the management is focussed and understands allocation of capital, he is comfortable with the business. What he isn’t comfortable with are companies that are hasty and raise capital regularly. In fact, Shah has ignored many companies where the management did not give him the right vibe.

How to read news
Rather than reading less, portfolio managers must learn to rapidly detect what is nonsense and move on. It’s a necessary skill when confronted with the hype and sensationalism now masquerading as news. Pseudo news and pseudo analysis clutters the web, making it harder to stay well informed.
Turn off your political bias when you read and interpret the news, and be wary of commentators who have political agendas.
Before you read the news, you must have your own framework in place for decision-making. Otherwise, you’ll be unduly influenced by what you read. As Ed Stavetski, founder of PCM Partners LLC, put it, “You must have an independent view of the markets or the media will force a view upon you.”

How to Read: Lots of Inputs and a Strong Filter
Most books don’t need to be read to the end, but some books can change your life – means you need two things to get a lot out of reading: Lots of inputs and a strong filter.
If you only pick up books you know with certainty you’re going to like you’ll confine yourself to reading the same authors on the same topics. It gives fresh oxygen to confirmation bias and limits your ability to connect the dots between different fields and different cultures. It’s better to have a low bar in what books you’re willing to try, and even the faintest tickle of interest should be enough to make the cut. Kindle samples are free so excuses are minimal.
Once you’ve flooded your desk with inputs comes the filter. It should be ruthless, taking no prisoners and offering no mercy.

Saturday, 14 December 2019

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

A drug to cure addiction of other drugs!
MindMed is a company that’s taking psychedelic drugs and turning them into medicine. This could save lives, cure depression, help alcoholism, get people off opioids. Its first drug has the potential to turn a person’s addictions—to cocaine, methamphetamine, morphine, sugar, alcohol—off like a light switch. It has a clear opportunity to help lower the nearly 70,000 annual drug overdose deaths that take place in the U.S. But the compound, 18-MC, has yet to undergo human efficacy trials.

Book stores and physical books are making a silent comeback
The industry is much better than it was — the last four to five years have been pretty healthy. The stores have survived the devastation the independent book business suffered after Amazon.com began selling books online and at lower prices in 1995.
statistics from the American Booksellers Association, a trade group for independent booksellers, show a recovery from the industry's darkest days. The ABA had 1,887 member companies as of May 15, up nearly 35% from 1,401 in 2009. The number of members' stores totalled 2,524 in May, up more than half from 1,651. Another sign of improving health: the number of books indies have sold. Book sales rose 5% in 2018 from 2017, and in 2017 they were up 2.6% from 2016.
Independent sellers are doing better even as Amazon continues to thrive online and to open its own stores, so far mostly in big metropolitan areas. The indies are also helped by the fact more people are reading printed books rather than electronic versions — sales of e-books fell 37% between 2014 and 2018

A new ad-model from Hulu binge watchers
Hulu knows many of its viewers watch show episodes back-to-back, and it's determined to bank on that with its advertising. Hulu is rolling out an ad system designed for binge watchers. The approach uses machine learning to predict when you're likely to marathon a show, and then sends "contextually relevant messaging" that acknowledge your viewing spree. When you reach the third episode, however, Hulu pulls out all the stops. It'll either give you an ad-free episode (with an ad beforehand, mind you) or a special offer from one of its sponsors.

Nestle sells ice-cream business to focus on core competency
For much of the last two years, Nestlé ​has been overhauling its portfolio to capture growth in the food space and shed underperforming or slow-growing businesses. Last year, Nestlé ​​sold its U.S. chocolate business, a deal that included more than 20 American candy brands like Butterfinger and Baby Ruth, to Ferrero for $2.8 billion.
Nestlé made a major bet on the future of plant-based foods with the 2017 purchase of Sweet Earth for an undisclosed sum. In the past few months, Nestlé expanded Sweet Earth into Awesome Burger and Awesome Grounds, the company's first foray into plant-based beef in the United States,. Last week, the company announced it would try the ingredient in its DiGiorno and Stouffer's brands.
It's also spending money to refresh its water business through the introduction of Poland Spring energy water and Nestlé Pure Life Plus, the brand's entrance into functional water.
Another focus has been the expansion of its coffee presence through the purchase of a stake in coffee shop chain Blue Bottle, the acquisition of Chameleon Cold-Brew and the dolling out $7.15 billion for the right to market Starbucks' beans, capsules and other products in stores.

The internet is forcing workaholism
A research team has found that hours worked since 1980 increased nearly 10 percent for Americans with bachelor’s and advanced degrees. Leamer told me that he believes this is because computing has shifted much of the economy from manufacturing to neurofacturing, Leamer’s term for intellectually intensive white-collar labor that is often connected to the internet, such as software programming, marketing, advertising, consulting, and publishing.
Neurofacturing jobs lend themselves to long hours for several reasons, Leamer said. They’re less physically arduous, as it’s easier to sit and type than to assemble engine parts. What’s more, the internet makes every hour of the day a potential working hour.
If the operating equipment of the 21st century is a portable device, this means the modern factory is not a place at all. It is the day itself. The computer age has liberated the tools of productivity from the office. Most knowledge workers, whose laptops and smartphones are portable all-purpose media-making machines, can theoretically be as productive at 2 p.m. in the main office as at 2 a.m. in a Tokyo WeWork or at midnight on the couch.

Friday, 6 December 2019

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

E-Sports (competitive video games) is big business
China now boasts a gaming population of over 500 million, and competitive gaming has become big business. Esports-related sales in China hit 51.3 billion yuan ($7.3 billion) during the first six months of 2019 and are on track to top 100 billion yuan for the year.
There are more than 5,000 gaming teams operating in an industry that now employs 440,000 people.
Depending on their contracts, trainees are paid about 10,000 yuan per month, while mid- to upper-ranking gamers earn around $50,000 annually, according to Li Xinyuan, the team manager. Top-tier gamers can earn over $90,000. Those rates mean even trainees make more than average factory workers in Shanghai, whose initial monthly take-home pay is typically around 4,000-5,000 yuan per month.

Vinod Sethi's prescription to becoming a better investor
Mr. Sethi believes that formal education is a necessity but not sufficient. He believes that education doesn’t teach you about hunger, relationship, courage, inner voice – listening to yourself, feel the present moment and many other aspects. There are many other aspects and skills which one requires in investing business and daily life.
Mr Sethi reads at least one annual report a day. He might read an annual report of a private company in Europe where he won’t be even able to invest. According to him, an annual report is a summary of collective human effort. Hence, it shouldn’t matter what annual report you are reading. One makes money where one sees financial efficiency, an alchemy or something stands out. There is no need to read an annual report to the last line. Over time one can develop sense as to what to read and what not to read. Also, according to him, speed reading helps.
Only way to meet very smart people is by making yourself very smart. No one would give you time unless you give more than they gave you. If you start every meeting thinking I must give more than what I am expected to gain, then you achieve a very high level of evolution at personal level.
Three things are a must do for a good investor:
Pay attention to the Market, Read & Research and Introspect

Can mirrors do the trick?
A typical large steel mill might burn through 1.5 million metric tons of coal in its furnaces in a year. It hasn’t been possible to run that type of industrial process on renewable energy, because of the extremely hot temperatures required, making nearly a quarter of global emissions hard to eliminate. But new technology—which concentrates solar thermal energy to 1,000 degrees Celsius for the first time—could transform some of the most polluting industries, including steel, cement, and petrochemical production.
The technology, from a California-based startup called Heliogen, uses an array of mirrors to reflect sunlight.

Machine learning determines ghost writer writing for Shakespeare
Literary analysts have long noticed the hand of another author in Shakespeare’s Henry VIII. Now a neural network has identified the specific scenes in question—and who actually wrote them.
For much of his life, William Shakespeare was the house playwright for an acting company called the King’s Men that performed his plays on the banks of the River Thames in London. When Shakespeare died in 1616, the company needed a replacement and turned to one of the most prolific and famous playwrights of the time, a man named John Fletcher.
The new approach is straightforward in principle. Machine-learning algorithms have been used for some years to identify distinctive patterns in the way authors write.
The technique uses a body of the author’s work to train the algorithm and a different, smaller body of work to test it on. However, because an author’s literary style can change throughout his or her lifetime, it is important to ensure that all works have the same style.
Once the algorithm has learned the style in terms of the most commonly used words and rhythmic patterns, it is able to recognize it in texts it has never seen.

Podcast: Replacing faulty body organs
Laser-printing organs and vascular systems to give everybody another chance has incredible value. It changes the dynamics of how to handle endemic diseases like diabetes and many other organ issues, liver, kidney and maybe eventually very complex systems like the nervous systems inside our bodies.